job creators

Hostess Executives Teach Us All A Little Lesson About Personal Responsibility

Today is really a red-letter day for corporate malfeasance and incompetence here at Wonkette, isn’t it? It is! And such a day wouldn’t be complete without a discussion of the Hostess CEO, whose corporate “maneuvers” might “deprive” workers of some of their pension money by using it for “operations.” (This is corporate speak for saying that the CEOs padded executive pay by stealing money from worker pensions.)

According to a report by the Wall Street Journal, Hostess’ CEO, Gregory Rayburn, essentially admitted that his company stole employee pension money and put it toward CEO and senior executive pay (aka “operations”). While this isn’t technically illegal, it’s another sleazy theft by Hostess executives – who’ve paid themselves handsomely while running their company into the ground. Just last month, a judge agreed to let Hostess executives suck another $1.8 million out of the bankrupt company to pay bonuses to CEOs.

Let us pause for a moment to note that this is not technically illegal. It seems like something that SHOULD be illegal, probably, and something that WOULD be illegal if done in reverse (i.e. workers taking executive pay in order to subsidize their own pensions) but then again, that would be Class Warfare so maybe it shouldn’t be illegal. Also too, it was because of an accounting mistake. Everyone makes mistakes right? Of course they do. Just a little mistake involving a couple zeros, nothing to get too pissy about.

…Back in 2005 Hostess sent out a letter saying they’d just had a very, very profitable quarter. Their stock jumped up. The CEO, Charles Sullivan, and many of the senior executives sold chunks of their stock.

[…]

Then, a few weeks later in 2005, came the letter saying that, oops, all of that profit had really been just an accounting error – the company was actually in trouble. Although the CEO and the top guys had all made a nice killing selling the stock when it was high, and paying a maximum income tax on it of 15 percent because they used the Capital Gains loophole that Mitt Romney used to become a multimillionaire, they now wanted the workers to take a big pay cut.

Beverly Hills surgeon explains at home fix for crepey skin around the arms, legs, and stomach.

And they DID take a big paycut, while executive pay soared, and while executives “borrowed” from the workers’ self-funded pensions.

Also, if the CEOs shorted the stock in anticipation of that second letter, they made an EVEN BIGGER KILLING, which again, is probably technically not illegal. Or maybe is illegal, but without any real consequences, making it de facto not illegal, because these are JOB CREATORS we are talking about. Also the CEO wasn’t there when it happened, so it’s not his fault probably, he says.

You know, when we were young and naive, we thought that the people got paid lots of money — like CEOs, for example — got paid lots of money because they were ultimately responsible for everything. Apparently it is the total opposite, and they are responsible for and beholden to nothing. After all, they have the gold so they make the rules.

Kris E. Benson writes about politics for Wonkette and is pursuing a doctorate in philosophy. This will come in handy for when they finally open that philosophy factory in the next town over.
@Kris_E_Benson

Longer answer: If a company can claim it has overfunded its pension pool (which are supposed to be held in trust) it can "borrow" the surplus, leaving an IOU in its place.

Unfortunately, if they, um, make a mistake, that IOU becomes a general liability of the company and will only be funded to the tune of pennies on the dollar after a bankruptcy.

And the beauty? The shortfall has to be funded by the Pension Benefit Guaranty Corporation, which is a quasi-public company (think FDIC) and that money comes out of….ta-da! your pocket.

All this requires is a CPA with less ethics than a crack whore.

jello_mold

Do they even go through the motions of teaching ethics at B-school?

Bad memories: I had a former "employer" (Cal grad, CPA, MBA Wharton) tell me that because I worked at a startup, I shouldn't expect to get paid. When I took him to the Labor Board he said at the hearing I was killing his dream and he might have to sell one of his houses.

mayor_quimby

Did the board burn him at the stake, or by rotisserie ?

jello_mold

Oh, the hearing officer didn't think much of his argument and he lost. The hearing officer's distain went right over the ex-boss's head. How dare the board find in favor of me! He sure was a contemptuous asshole all around.

I just don't get these upper upper middle class toadies' thinking. What do they think us poorz are, airetairians?

I swear these fucks think slavery is a viable business plan. It's just that the word "slavery" is SO tacky.

Tundra Grifter

For a few years during one of the recent stock market booms, many companies were reporting "profits" that consisted entirely of underfunding employee pension plans.

Because those plans have assets "marked to market" and use "market assumptions" in good years the actuaries can project rapid growth.

Of course, when reality sets in…well, what do you expect when reality sets in?

I've always been fond of the classics, like tar and feathering, then the stockades where the 98% throw rotten eggs and tomatoes at them, followed by being run out of town.

However, having just watched "Trading Places" for the 35th time (it's my Christmas movie), where Eddie Murphy says, "The best way to get back at rich people is by turning them into poor people" and then at the end where the lovely island girl says when offered shrimp or cracked crab for lunch and says, "Can't we have both?" Yes, I want these mofos shamed AND poor.

Well, since FOX News has spent the last two days covering an idiot contributor of theirs and Breitbart being punched by a guy he threw to the ground, I'm sure they will be given similar coverage to this side of the labor debate. They are fair and balanced, after all.

and all those poor workers with Snowball Lung getting fucked out of their deferred compensation.
This guy should rot – unlike his edible non-food products.

Botlrokit

This is the most delightful part about these assholes: It's on their resume now.

So you have experience in management, eh? What titles have you held?

Chief Operations Officer.

Tell me about your education.

I received an MBA from Harvard University Graduate School of Business in 1998, with undergrad work at Princeton; that was a BA in Comparative Literature in 1992. Graduated summa cum laude from Harvard.

Seriously folks, this has been happening for decades. Ever since Raygun dropped pension requirements in US Amercia corps.

When a CEO and his buttlickers get their bonuses and the money for stock options where does it come from? Not the actual operations budget because that would be stupid. They get their bonus cash from the big bucket of pension money that hasn't been vested yet. Then they turn around and cry that they need to increase the cost of health insurance, copays, and cut back on your pay increases.

It's all legal.

Of course, this is why the CEOs shrieked like crazy when in 94 accountants wanted to change the rules to account for these monies. A few bucks to the proto Teabagger Newty Toot led GOPers and voila! No accounting changes. If the changes had gone through then everyone would realize that the profits (and pension money) was going to execubots.

Isyaignert

Brilliant and simultaneously hilarious – "execubots"!

glasspusher

Someone's heading for one hell of a wrist-slapping.

Antispandex

Maybe this is why Public Employee pensions are so unpopular? I mean you konw your boss is going to fuck you out of yours, so why should ANYONE get one! I mean, it's only fair, amiright?

You know, I could take care of this problem in a day. If only I could find a good deal on some pikes …

Tundra Grifter

So Executive Management used the workers' pension monies to run the company (and pay their own bloated compensation) and the workers never thanked them for it?

How ungrateful!

pdiddycornchips

That unions caused the death of the Twinkie is embedded now in our Corporate Media hard drives. Nothing to the contrary can be true no matter how factual. It has been decided. Unions are greedy and CEO's are paid well 'cause they are super special people. Sometimes they do illegal things but we cannot treat them like criminals. They are special.

Redgyal

Like Ken Lay.

mormos

so…much…rage…

Redgyal

Now if they had taken $100 from a cash register at a 7-11, THEN that would be theft.

Walkinwiddaking

It must be some airy poundage if you can get that many old guys together and dead lift a Twinkie.

you know, i'm beginning to think the free market is mostly a chimera intended to conceal the fact that rich people are often pricks intent on proving there's a sucker born every moment.

LadyWisdom

Dear Wonkette please stop linking to subscription articles at the Wall Street Journal. It gives Rupert Murdoch page clicks but unless you subscribe they won't let you read the article. They win, we get nothing.

Thank you.

MissNancyPriss

Alone here, just laughed til sobbing over that photo.

Zombie_Reagan

So it wasn't union thugs looting their own pension fund? You could knock me over with a feather.